Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?

Esther K. Ishengoma and Robert Kappel ()

No 20, GIGA Working Papers from GIGA German Institute of Global and Area Studies

Abstract: The informal sector (IS) plays a significant role in developing countries viz. the provision of employment, income and supplying ignored markets. However, working and employment conditions within the sector are still poor. Its expansion and changing structures have thus drawn the attention of scholars and international policy makers to the factors hindering its formalisation. Among the factors addressed are the high costs of formalisation and the lack of incentives for operating in the formal sector. A variety of approaches have been adopted by different stakeholders to overcome these factors. This paper assesses these approaches along with the factors related to informality-formality trade-off and the issue of formalisation as a solution for firms' growth. By focussing on the problems faced by informal enterprises and the literature which addresses the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches.

Keywords: informal sector; small enterprises; formal and informal institution; cost of formalisation; informality; formality; poverty; economic growth (search for similar items in EconPapers)
JEL-codes: D2 E26 I3 L5 O17 O4 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:gigawp:20

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